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Influence of digital transformation on banks’ systemic risk in China

Author

Listed:
  • Zhao, Guoqing
  • Bi, Xiaohan
  • Zhai, Kun
  • Yuan, Xuemei

Abstract

This study measures the systemic risk of 183 listed and unlisted commercial banks in China from 2010 to 2021 using machine learning algorithms to investigate the influence of digital transformation on banks’ systemic risk, finding that digital transformation has an inverted U-shaped influence on banks’ systemic risk. Risk-taking and noninterest income have important mediating roles. High regional digitalization can weaken the effect of digital transformation on banks’ systemic risk, whereas market concentration has an opposite moderating effect. The results presented in this paper are of particular importance for regulatory authorities to improve the systemic risk prevention of banks.

Suggested Citation

  • Zhao, Guoqing & Bi, Xiaohan & Zhai, Kun & Yuan, Xuemei, 2024. "Influence of digital transformation on banks’ systemic risk in China," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s154461232400388x
    DOI: 10.1016/j.frl.2024.105358
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    More about this item

    Keywords

    Machine learning; Digital transformation; Bank systemic risk; Inverted U-shaped effect;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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